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The Problems and Pitfalls of DIY Probate

Dawn Joughin looks at the problems that can occur with Do-It-Yourself Probate.

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Dawn Joughin - Head of Private Client Law

When someone passes away, with or without leaving a Will, their money, property and belongings need to be dealt with according to law and accounted to the beneficiaries. It may seem like a good idea to save on professional costs by acting in the administration of an estate yourself, but beware, taking professional advice can actually in certain circumstances save you money, reduce stress, and save your precious time.

Is there a valid Will?

Problems can arise with the validity of a Will, due to questions surrounding the signing of the Will, or capacity issues. Wills can often set up trusts in respect of property, or sometimes as part of tax planning. Further complications can arise when beneficiaries to a Will have already died.

Where there isn’t a Will or one cannot be found, the estate passes according to the Intestacy Rules which do not necessarily follow the order that relatives might expect and sometimes a professional opinion is required.

Some of the most common mistakes made by non professional personal representatives otherwise known as executors or administrators:

  • Presumption that a co-habitee is a common law spouse and entitled to their partner’s estate. There is no such thing in England and Wales as a common law spouse. The Intestacy Rules do not make provision for co-habitees. If that situation has arisen we are able to advise on making the appropriate application to court for provision for a surviving partner from the estate.

  • Adopted children are not entitled to share in an estate of their adopting parent. Wrong. Legally adopted children are entitled to share in their adopting parent’s estate. They are not entitled to benefit from the estate of their natural parents.

  • Not realising when an estate passes to siblings of a deceased, any children of a deceased sibling are entitled to their parent’s share.

Inheritance Tax (IHT)

As part of the application to obtain a Grant of Probate an Inland Revenue Return needs to be submitted. If the estate is relatively straightforward with no lifetime gifts and does not exceed the Inheritance Tax (IHT) threshold (currently £325,000) then the “short form” (IHT205) may be used. As it is only a few pages long, the short form doesn’t seem too daunting, however guidance notes that stretch to around 40 pages show that it is not as straightforward as it seems.

Where estates exceed the IHT threshold or the estate has business or agricultural property within it, then a full Inland Revenue account needs to be submitted and this can prove a very time consuming and complicated affair for lay personal representatives. If the account has been submitted incorrectly and the Revenue determine this has been done negligently, they are likely to issue penalties which can be severe.

Claiming Reliefs

There are many different reliefs or exemptions which may be claimed in respect of IHT. If you do not claim them you will lose them. Also some of the tax due may be paid in installments. The Inland Revenue are not obliged to point this out to you so a professional opinion is recommended.

Peace of Mind

The administration of an estate can present issues and traps for the unwary. It can be hazardous for those acting as Personal Representatives as they will be held personally liable by the beneficiaries if exemptions or reliefs are not claimed in full or penalties are imposed by the Revenue for the negligent completion of an Inland Revenue Account. By ensuring that proper advice is obtained the executor or administrator can avoid personal liability.

A professional advisor will also produce a set of estate accounts so that all the beneficiaries can see the value of the estate and be certain that they have received the correct entitlement. They can also, where necessary, arrange specific types of insurance, for example Missing Beneficiaries insurance and Unoccupied Property insurance, and prior to distribution of the estate will be able to conduct bankruptcy searches on the beneficiaries to ensure that they are entitled to the monies rather than their Trustee in Bankruptcy.

In addition, an experienced lawyer will be able to advise on the appropriate application of a Deed of Variation (a method of changing the terms of a Will within 2 years of the date of death). A Deed of Variation can be used to improve the Inheritance Tax position of a beneficiary or to resolve disputes or potential problems with the Will.

Wills and Probate advice from Canter Levin & Berg Solicitors

If you need professional legal advice to avoid the pitfalls Do-It-Yourself Probate can bring, contact the Private Client Department at Canter Levin & Berg Solicitors. We offer a fixed fee service when it comes to Wills and Probate enquiries, so you know from the outset how much sorting out your Will, or providing advice on Probate issues will cost. To find out more call our Private Client team on 0151 239 1181; alternatively, you can book an appointment to speak with a member of the team at our regular clinic held at the Age UK information and advice centre, Golden Square Shopping Centre, 14 Sankey Street, Warrington.